Leadership within Holacratic Business Models

In a TED Talk entitled “Why Not Ditch Bosses and Work Together”, Holacracy founder Brian Robertson, encourages a radical way to think about how we view leadership. Finding traditional corporate hierarchies restrictive, Robertson notes how an organization’s capacity to integrate and harness information essentially shuts down if that information is not perceived by the ‘boss.’ He adds that as a team member responsible for seeking out a particular piece of information still could not act that on that vital info if figures in traditional corporate hierarchies didn’t seem it sufficiently important to business process. Never mind how important it actually is, if it’s not perceived as important, it’s not adopted. Suffering this complex himself in his own day job, Robertson set out to become the boss of his own company, only to find that the problem of hindered processes continued. According to him, the problem lies with the fact that the systems aren’t responsive enough. He saw that even as a CEO, he couldn’t take in everything he saw and process it. In fact, the irony of the situation is that he ended up building the exact same system he sought to escape from.

Traditional leadership hierarchies don’t work if you want an efficient system. Twitter co-founder Evan Williams would agree. He believes Holacracy is all about building a mindful company that supports both structure and flexibility. In a startup environment that usually embraces loose boundaries, a Holacracy can provide definition and clarity while still providing a business climate that encourages freedom and creative thought. In an article by psychologist Olivier Compagne entitled “Evan Williams on Building a Mindful Company,” Compagne writes that “at its core, Holacracy is a ‘tension processing system’, it can integrate everyone’s feedback into meaningful change without requiring leaders to ‘manage’.”

In a corporate setting, a Holacracy allows for talented team members to continue fulfilling their potential as opposed to getting pegged in a job description – a view Williams agrees with. In the article by Compagne, William tells how:“In the past, as my companies have grown, I’ve hired these amazing people and I felt like I was getting less and less of them as the company got bigger. Part of that was because they were in a particular area and they had ideas, concerns or perspectives, that were relevant outside of those areas, but it wasn’t clear what to do with those. Holacracy provides a very specific way where people are actually encouraged to bring this stuff up. It’s called processing tension; it’s very efficient and you really take advantage of everybody’s perspective and ideas.”

The Holacractic business model is catching on. In December of last year (2013), Zappos, the online retail giant, moved away from a traditional management structure in favor of the manager-free model under Holacracy. A Business Insider article by Max Nisen, entitled “Zappos is Getting Rid of All Titles and Managers,” observes how Holacracies enable an increase in “the level of accountability, since employees are held accountable by all their coworkers rather than a single manager, as well as [increasing] transparencies in order to quickly and publicly resolve sources of tension.”

For real-life application, consider this example as offered by Robertson: Let’s say a said task is assigned to employee A, which turns out to be challenging for that employee. Robertson defines this challenge as a ‘tension’, which the ‘circle’ (team members) would resolve by setting a new expectation about the task – perhaps something more definitive that would help resolve the challenge. Should employee A perform to task, they should not be subject to questioning; in other words, their decision shouldn’t be undermined. However, if they fail or prove incompetent, then the team has the power to come together and make a collective decision on how to move forward. In this case it would be another shot, assistance, re-assignment, or termination. Here we see how all employees are given a leadership role since the ultimate decision would be the teams. A team that is intimately involved with the process and thus better able to act as a ‘sensor’. According to Robertson, the advantage here is that in this structure “workers are more concerned with the task at hand than trying to look good for the boss.” Once employees stop being stressed about impressing bosses, they can shift their focus on excelling in performance – a commitment to success that trickles down to the end-user.